B&L delays pending sales investigation

Global eyewear business Bausch & Lomb has delayed announcing its fourth-quarter and full-year results for 2005 as it investigates allegations of improper sales practices in Asia.

It was expected that the giant company, which has also been investigating its finances at its Brazilian subsidiary, would report its figures shortly, but the announcement has been put off until next month. Now the business is to look into 'revenue recognition practices' at its South Korean subsidiary.

A company spokesman said: 'The company cannot at this time predict with certainty when the investigation will be substantially complete. However, based on the current status of the investigation, it expects to be in a position to report the preliminary results, including the estimated financial impact of the matters under investigation in Korea, by early March.'

B&L, which will host its global symposium in Athens later this year (see page 6), was due to post its earnings on February 1, but will delay to investigate B&L Korea, which reportedly accounted for $33m in net sales in 2004.

The investigation first surfaced just before Christmas, when B&L revealed a probe into its BL Industria Otica (BLIO) subsidiary in Brazil, which had revealed 'a material weakness'.

This enquiry found that the general manager, the controller and other employees of BLIO had engaged in improper management and accounting practices.

This included, among other things, the misappropriation of $600,000 in expenses to fund a $1.5m unauthorised local pension arrangement for the benefit of themselves and other members of local management, the avoidance of Brazilian payroll tax obligations, and the misuse of company assets for personal benefit.

Brazilian tax authorities, it said, had made assessments for unpaid taxes totalling about $5m, $7m in interest and $21m in claimed penalties.